Fenix Wins $12.6M to Grow Solar, LEDs, Batteries and Entrepreneurs in Africa

For customers in Uganda, the grid edge is the ability to charge a phone or keep an LED light powered.

Eric Wesoff January 27, 2015

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

Fenix International, a supplier of small, solar-powered charging systems for off-grid African communities, closed a $12.6 million Round B from investors including GDF Suez, Schneider Electric, Orange France Telecom, Tom Dinwoodie and Warner Philips. Fenix has also won grants from the Africa Enterprise Challenge Fund and the GSMA Foundation. Other past investors include AlphaMundi and Persistent Energy Partners.

For many of GTM's readers, "grid edge" describes the shift to a modernized grid with distributed energy resources and customer energy management.

But for customers in Uganda, the grid edge is the ability to charge a phone or keep an LED light powered rather than burn kerosene.

The distributed energy model could occur first in the developing world, not the industrialized world, according to this investment thesis. Distributed renewables, like mobile phones before them, allow countries to skip the network infrastructure build-out of wired telecom or energy networks.

The Fenix product is a plug-and-play power station -- essentially a battery with a variety of charging options (solar, bicycle, or grid) and a variety of outputs that allow the unit to charge mobile phones or power a light. It allows entrepreneurs and shopkeepers in frontier markets to create a small revenue-generating mobile payment business charging cell phones. The equipment can be micro-financed by the entrepreneur.

The potential market is enormous; more than 1 billion people live without power in developing nations and 3 billion people are "energy-deprived." Approximately 600 million of these people use cell phones.

But distribution is crucial. Fenix is partnering with mobile phone network operators such as MTN and Vodafone to take advantage of existing supply and distribution channels.

Fenix's CEO, Michael Lin, sees the startup "at the intersection of renewable energy, mobile communications and microfinance." He claims that before his product was available, "A solar energy system would cost a farmer more than a third of her annual income, but now she can finance clean, reliable electricity with her cell phone by making micropayments of as little as $0.35 per day."

Lin noted that the funding included "working capital to produce the hardware as well as finance it for the end-consumer (think micro-SolarCity financing)." He points out, "Fenix's mobile-enabled solar technology has been validated in the field by our customers over 5 years. It's also undergone significant due diligence and validation by our energy investors GDF Suez and Schneider Electric as well as telecoms MTN, Vodafone and Orange in order for them to put their brands on the product. he added, "The ReadyPay micro-transactions from customers generate big-data which we use to create a next-gen credit score for people who previously had no access to financing before."

Last year, we covered the friction between Microsoft founder Bill Gates and SunEdison founder Jigar Shah when they differed over the best way to provide cheap energy to the world’s poor. Gates calls for traditional, fossil-fuel-based electricity generation. Shah aims for distributed renewables. Carl Pope, the former director of the Sierra Club, suggests that renewables are the only energy source that makes economic sense in the developing world. He writes, "Off-grid renewables sweep the affordability table."

Brad Mattson, CEO of thin-film solar manufacturer Siva Power (a recent $3 million DOE SunShot awardee), was previously a VC investor and entrepreneur looking for opportunities in the off-grid solar market. He notes that "the market is real" and the technologies are available. But Mattson sees four major issues: product (needs to be cheap and robust), financing (mobile payment is the right solution), theft-channel loss (security is key), and distribution cost (can be 5X to 10X in these economies).

Mattson adds, "I've worked with about ten companies in over twelve countries on these issues. Sure, there are 1.3 billion customers, but getting to them economically is tough."

A lot has changed in the market in just a few years. In 2014, companies developing off-grid solar solutions raised at least $64 million from venture and corporate strategic investors -- helping bring the capital to start reaching those customers.

To hear more about how the off-grid market (or what some call "beyond the grid") is evolving to attract more investment, listen to the Energy Gang episode below: